In the recent professional negligence case of (1) Andrew O’Neill (2) Elizabeth O’Neill v Bull & Bull (A Firm) 2018, Judge Simpkiss sitting in Canterbury County Court found that there had been a breach of duty by the Defendant but that breach did not cause the buyers a loss.
The brief facts were that the O’Neill’s were buying a house with a mortgage and had instructed Bull & Bull to act for them in the purchase. It was a term of the lenders conditions that a survey report on subsidence/movement be obtained before the mortgage advance would be paid as the mortgage valuation report (MVP) had highlighted a potential problem.
Contracts were signed without the survey report being obtained. This meant the O’Neills were committed to go through with purchase or face a costly penalty. The lender refused to advance the purchase money, though this issue was resolved and the purchase completed. A report had been obtained confirming there was no evidence of recent subsidence or movement.
Unfortunately, after moving into the house the O’Neills complained of continuing subsidence or movement and claimed as a consequence there was diminution (reduction) in the value of their home. In essence they argued the house was worth less than they paid for it.
A claim was brought against Bull & Bull for their alleged failure to warn the O’Neills about the mortgage conditions and the reference to subsidence or movement in the MVP. Had these issues been brought to their attention the O’Neills claimed that they would not have proceeded in the purchase. They were left with a house worth less than they had paid for it and their claim for damages was the difference between the purchase price paid and the actual value of the house with the subsidence problem.
The Court found that there was a breach of duty as the solicitor had failed to explain to the O’Neills, who were unsophisticated clients, the nature of the transaction, the contractual terms and the mortgage. There was no evidence on the solicitor’s file that any of these steps had been taken. Further, the issues raised in the MVP cast doubt on the structural integrity of the property which should have alerted the solicitor to the potential difficulties in obtaining a mortgage.
On the facts of the case however the Court found that the breaches of duty did not cause a loss as the evidence did not prove that the O’Neills would have pulled out of buying the house if properly advised. In fact the Judge found they would not have acted any differently.
Had the O’Neills proved that they would have acted differently if properly advised then they would have recovered compensation.
Compensation may have been recovered in this case if the O’Neills could show for example if properly advised by the solicitor they would have negotiated a lower purchase price reflecting the problems with the house. If successful their loss may have been the difference between the price paid for the house and the lower price they lost the chance to pay.
This case is reminder that solicitors acting for buyers in property transactions must take account of their clients’ level of sophistication or knowledge base. They must make sure that they comply with their duties to that client, which must include an explanation of legal documents or at least ensuring that the client understands the material parts and this is of particular import where any terms of that document are unusual.
If you think you may have been negligently advised during a house purchase, Jordans Professional Negligence Department may be able to help and can be contacted here.